TOPIC: 05 Boxoffice: No Happy Ending

Hollywood's year-ending good news is that moviegoers are opening hearts and pocketbooks for "King Kong" â€” more than $60 million on its debut weekend and counting.

The bad news is that audiences did not exactly go ape over the rest of 2005's cinema offerings, making this the third straight year of decline in Hollywood ticket sales â€” the first such stretch of bad news in 40 years. Because of the continued falloff â€” sales are down 12.6 percent from 2002 â€” a growing number of analysts wonder if America's movie habits are changing permanently.

"The industry has to consider whether or not American audiences are sending a message about the quality of the movies they are getting â€” or just the way and the place in which they get them," says Paul Dergarabedian, president of Exhibitor Relations, a firm that analyzes box-office trends. "You can bet that producers, writers, directors, and studio heads are all huddling intensely to consider what this means and change their behavior to keep it from continuing."

It could just be a continued shift away from multiplexes toward Blockbuster, Netflix, and other home-viewing options, Dergarabedian and others say.

In this scenario, consumers are changing their movie-viewing habits because of multiple complaints related to theater-going: soaring ticket costs, high parking and candy-concession prices, and, perhaps, decreased enjoyment of the movie-house experience because of unruly audiences and growing numbers of on-screen ads.

"People have had it with all the annoyance and cost of going out when they can be in so much better control of what they see at home, and for cheaper," says Nancy Snow, professor of communications at California State University at Fullerton. "That means fewer and fewer want to put up with the hassle unless they know the movie will be outstanding. So they have higher standards and expectations."

The more worrisome scenario for Hollywood is that audiences are shifting to other entertainment options. Those would include video and Internet games for youths, TV among older Americans, and other leisure options from sports to travel.

"At the same time the technological world is giving moviegoers all kinds of other entertainment options, there has been an increase in the quality of really great serial television â€” both broadcast and cable," says Peter Lehman, director of the Center for Film and Media Research at Arizona State University at Tempe. "That is giving audiences the kind of character development that they feel is missing from so many Hollywood blockbusters, which are overly concerned with special effects."

Still other analysts say the falloff in cinema attendance could be a combination of both developments, which can and will change with the quality and affordability of movie and nonmovie options.

"I would suggest there are lots of good reasons why there is a sea change in the nature of moviegoing and at the same time lots of reasons to believe it's not an apocalypse," says Stephen Prince, president of the Society for Cinema & Media Studies. Prior to the late 1990s, he says, U.S. movie attendance held steady â€” at about 1 billion per year â€” for several decades. In his analysis, the increases of the past few years could be a bubble-like anomaly that is now ending.

One of the most telling developments, say analysts, will be the impact of a new idea by film Steven Soderbergh and producer Mark Cuban. The two have struck a deal to release films in three formats â€” theaters, DVD, and television â€” all on the same date. The first of them is scheduled in the next two weeks.

"Soderbergh and Cuban are projecting that the current model of theater-release, then a delay for DVD, and another delay before showing on TV is history," says Lehman. "How consumers respond to this experiment will be very telling."

1. Turn out better movies, and spread them out a little more evenly throughout the year. Summer and Christmas are obvious peaks, but you can't shut down during the rest of the year and be expected to survive. If you have to, cut down on the crap and put that money into the decent stuff. Need some help? Ask some of us. We are constanly amazed that you spend real money on some of the films you send us.

2. Exercise some moderation on the ads, for cryin' out loud.... and take off the blinders. You know your customers mostly hate them. The short term money you're gaining is screwing up your long-term future.

3. Exhibitors, take back control of your auditoriums. Show some backbone. Increase your liability insurance, set some policies, then train your managers to apply them. You CAN enforce rules regarding behavior, cell phones, infants (including noisy teens) outside food and legs draped all over your $200 seats. Be nice if you can... if you have to, toss their butts out. In the short term you'll feel like you're ejecting more customers than are paying for tickets. That might be true, since some of them are probably sneaking in your exits. Eventually though, you'll rebuild the kind of customer base you wish you had now.

4. Pay a little more attention to your presentation. That's why your customers really showed up... not for your video games, popcorn or advertising, though those can be positive aspects of the program, if you fix the problems.

5. Sure, it's a tough business these days... but at least TRY to prevent the experience from feeling like your wallet just got raped. People are a lot less distracted over what they spent when they perceive they got a little value for the pilliaging that took place.

6. Take some lessons from your roots. Some of us indies are here BECAUSE of the lousy experience at your place. Ironically, if you cleaned up your act, we'd still do better. Believe me... some of us who own drive-ins would never have believed the business we'd get because you've been chasing your customers away and denying it's happening. Thanks... I guess.

7. Pay the talent a LOT less. The bottom line nut is simply too great for all pictures. That in turn drives my expenses up- I wasn't paying 55-60% film rental 20 years ago. "Actors" like Cameron Diaz are not worth the 20 million a pic they demand.

I reckon both thoughts are right with the downturn in 2005.
(1) The Movies and lack of big busters eg Spiderman, Shrek 2 and Harry Potter Mid Year I think really helped 2004 kick along and also alot better block busters through out the year with Van Helsing, Kill Bill 2, Passion Christ etc.
(2) The competition from the home market with DVD's. Alot of people that I talk to in their new homes are building home cinemas with big stereo systems and screens to replicate the cinema.
(3) The expensive prices of the movies and the low prices of DVD's. People can save money buying a dvd and have it for life.
(4) The distributors decreasing their windows and advertising movies less and then advertising the movie again on DVD.
(5) The untidiness of cinemas/ coke on seats/ Old Seats/ Bad sight lines/ ques, unfriendly staff etc
Anyway there probably is alot more options.

With the 2005 domestic box office race wrapping up this weekend, two things are clear: Warner Bros. and Fox can be glad they're in a virtual tie for first place, but nobody in Hollywood has much reason to smile.

With the exception of blockbusters, nothing worked as well this year. While the top 15 films of 2005 -- those with domestic cumes over $120 million -- were on a parpar with the top films last year, every film below No. 15 in the top 100 did worse than the one with the same rank in 2004.

Although the last few months of the year have minimized the B.O.B.O. deficit -- 8% in August, but down to 5% in December -- hopes have been dashed that a strong holiday season could close that gap entirely.

For the year, B.O. looks to come in around $8.75 billion, down from $9.2 billion in 2004. As has been the trend since 2002, rising ticket prices hide an even sharper drop in admissions -- 11% to 1.32 billion from the 1.48 billion last year.

Even more bad news: 527 new pics were released in 2005, compared with 507 in 2004. That means Hollywood did less business with more films.

Top-ranked WB and Fox, both of which made a little more than $1.3 billion (Fox got a $380 million boost from the year's top grosser, Lucasfilm's "Star Wars: Episode III -- Revenge of the Sith"), came in slightly ahead of 2004 pack leader Sony.

Final numbers will be released next week, but Sony is set to take third place for the year, with "Hitch" and "Are We There Yet?" its top earners. It's followed by Universal, Disney, Paramount, DreamWorks (thanks mainly to "Madagascar" from its sister toontoon unit), New Line, Miramax and Lionsgate.

But most studios in the No. 3 through 10 positions scored tallies lower than the studios with those rankings last year.

Among the year's top-grossing films, the same formula worked this year as last. Most were sequels or entries in well-known franchises, such as "Star Wars," "Harry Potter" and "Batman." Family-friendly tentpoles such as "Madagascar" and "The Chronicles of Narnia" were once again a good bet. And as with 2004's "Meet the Fockers," this year saw one $200 million-plus breakout comedy, "Wedding Crashers."

Of course, on their own terms, numerous low-budget pics hit big, including "Crash," "March of the Penguins," "The 40-Year-Old Virgin" and, if current trends continue, "Brokeback Mountain."

But on the whole, mid- and lower-tier pics in 2005 did a little worse domestically than in 2004.

The bar was lowered this year. For instance, "Diary of a Mad Black Woman" earned $50.4 million to land at No. 49. Last year, the midrange earners were more successful, meaning a $50.4 million tally would have put a pic at No. 64.

Some say the content simply wasn't as compelling this year, and it's true that 2004 saw a few unique hits such as "The Passion of the Christ" and "Fahrenheit 9/11." But high-minded pics like "North Country" and "Prime" earned less than $25 million while formulaic fare like "Fantastic Four," "The Pacifier" and "The Dukes of Hazzard" did well, so it's hard to say the problem is quality.

Most execs admit the competition for Americans' leisure time is now even greater, especially in the form of videogames, Internet and other digital options.

"It's a tougher battle for us to get the audience to come into theaters," said U vice chairman Marc Shmuger.

Clearly, people still are willing to venture into theaters for the year's biggest events like "Harry Potter and the Goblet of Fire," as well as breakout fare everyone's talking about, such as "Wedding Crashers." And parents still want a few films to enjoy with the kids, such as "Madagascar."

But in other cases, auds increasingly are willing to wait for the DVD. Or, as the slowing DVD market indicates, simply concluding the pic isn't worth it and renting a TV series DVD or firing up the Xbox instead.

Nobody has the answer to turning around the trend of a slumping B.O. But most execs agree that upping the number of films in the market, as happened in 2005, doesn't help.

"The market needs fewer movies, so there is less clutter and what remains can more easily break out," said Warner production prexyprexy Jeff RobinovJeff Robinov. "We also need more films with international appeal."

Of course, pics with worldwide appeal tend to have big stars and big f/xf/x, which can drive up the costs. With studio production budgets staying about even, that's another reason auds can expect fewer movies in theaters over the next several years.

Beyond focusing the content, Hollywood is hoping 2006 will be the year it draws more people into theaters by improving the moviegoing experience. Starting in the next few months, thousands of movie screens will be going digital. Besides reducing print costs and making it easier to shift pics between screens, digital will improve picture quality and allow for new effects, like the 3-D process that debuted with "Chicken Little" and is expected to be repeated with several films next year.

No matter the solution, the doldrums of 2005 have driven home one point to Hollywood: Despite the growing population and all the new production and marketing tools at studios' disposal, getting butts into seats is a tougher task than ever.

This is a bit about King Kong and also about the industry in whole this year!

It is from NY Daily News!

A 'King' without a crown

'King Kong' looked like a sure box-office No. 1 but lost out to 'Harry Potter and the Goblet of Fire,' 'Mr. & Mrs. Smith' and 'Charlie and the Chocolate Factory,' among others.

While the box office remains steady for Peter Jackson's "King Kong," it's safe to say that "Titanic's" record is safe.
In fact, after all the hype, the critically acclaimed remake of the 1933 movie may not even break into the top 50 of all-time blockbusters.

"Kong" sold about $125 million in tickets during its first two weeks, and some analysts are projecting its final domestic gross at about $220. That would put it just ahead of "Mrs. Doubtfire" at No. 50.

Where did those of us predicting spectacular numbers for "Kong" go wrong?

Judging by the E-mails sent to me, Jackson may have simply crossed the line by remaking such a revered classic. Readers were angry with me for even praising the new movie, and some were really steamed at my characterization of Kong's face in the original film as a "fright mask."

I love that movie, too, but I'm sorry, folks - compared with the new gorilla's fully expressive kisser, the original Kong was a stiff. Jackson's movie is the original done state-of-the-art justice. It's the same, just better!

But there is another, deeper reason for "Kong's" relatively disappointing performance. As worried analysts have been saying all year, American moviegoers are breaking their habits. They're just not seeing as many movies in theaters as they used to.

Studios and exhibitors have been laying the blame on the poor quality of films, but the ratio of bad to good was probably no worse than in previous years. In fact, most critics found more films to praise at the end of this year than usual.

Granted, the studios would be doing themselves a huge favor by spreading their quality films over the whole year rather than back-loading them into the fall and holiday seasons, and they should listen to Hollywood Reporter film writer Anne Thompson, who has been pointing out for some time that teenage boys and young men are no longer the dominant movie audience.

That is evidenced by the top 10 earners this year. (See below.)

In any case, the studios have trained us not to expect many must-see movies before summer. The result: People are staying home with their fancy new widescreen, high-definition TVs and renting movies available on DVD three months after their theatrical release.

When you figure in rising ticket prices, plus scandalously inflated concession-stand prices, parking, baby-sitting, maybe a snack or a drink afterward, well, you can pay off that plasma-TV investment in about two years.

It's debatable just how much of a slump theaters have suffered in '05. The box-office gross is expected to be about 5% below last year's, and when you take into account two '04 blockbusters that weren't really movies - Mel Gibson's religious experience "The Passion of the Christ" and Michael Moore's anti-Bush rally "Fahrenheit 9/11" - the numbers aren't nearly as bleak.

Still, habits are clearly changing.

Movie stars aren't nearly as irresistible as they used to be, and are even less irresistible given the short wait between theatrical and DVD. But if you have any love for movies at all, you have to see "King Kong" in a theater, preferably one with a screen as big as the ape. There is just too much going on visually in the movie to be fully appreciated on even the widest of home TV screens.

Why in the world, though, would you pay $10 each to see Jennifer Aniston in a slight comedy like "Rumor Has It" when you can have it delivered in the mail - by Netflix or Blockbuster - in April? And the run-of-the-mill studio movies coming between January and May are pretty much the same movies released in that period last year.

Going over some video mags a friend gave me to look over. I came across this.

"Marvel Studios top exec Avi Arad wants to go Disney chariman Robert Iger one better than releasing movies on DVD closer or simultaneous to their theatrical release. Arad said just prior to being inducted into the Video Hall of Fame Dec 5 that his next big idea is to produce a fully budgeted live-action movie say $60 million or so and release it exclusively on DVD. Even better, if it can be worked out technologically, logistally and legally, he'd like to distribute it as a platform release, beginning in one city and moving market to market over a period of weeks. He would charge a premium price for it, since it would not have played in theatres initially, say $39.99. It's a way to avoid the extra costs assiciated with marketing and distributing a film theatrically, where many either loose mobey or barely breakeven, and a way to justify raising the rental price of DVD's back up to a more profitable point. It's also a throwback to building and sustaining demand for a property over a longer period of time than a couple of weeks in theatres."

Don't let Roger Ebert fool you. BOP does not understand why he is so desperate to convince people that there is no box office slump occurring. The numbers don't lie, though. Ticket sales are off 11% from 2005, and there is no disputing the fact that the entire process of movie delivery has changed. Nothing represents this better than the fact that any technophile with a new iPod or PSP has the ability to watch a movie wherever they are at the moment. You could watch Seven Days in Tibet while climbing a mountain in Tibet if so inclined. These same consumers, the non-traveling ones, have the ability to watch their choice of three different DVDs at any time without doing anything more than opening the mail. The fallout from this unprecedented movie availability is only now being appreciated in cinemas across North America.

The most telling signs that box office behavior was altered came during the summer of 2005. Prior to the release of Fantastic Four on July 8th, overall box office receipts declined every week of the summer. That's right, I said every week. For a period of 19 consecutive frames beginning the week after President's Day, 2005 failed to match the intake of 2004 each and every weekend. Even worse, after the brief spike from Fantastic Four and Charlie and the Chocolate Factory in mid-July, box office once again precipitously declined. In the time leading up to Labor Day weekend, overall box office was down 24 out of 27 times. That means for a period of just over half-a-year, box office fell from the previous year's frame almost 90% of the time. Despite what Roger Ebert says, that's a slump.

In every disaster, there is that defining moment which is a microcosm of the unfolding drama. In the case of summer 2005 box office, we have two such disastrous snapshots. Amazingly enough, they came on consecutive weekends. The first sacrifice at the altar of evolving consumer behavior was The Island. The film was directed by Michael Bay, a man whose critics are numerous but whose box office exploits are the stuff of myth and legend. He had never had a financial failure in his entire career. When he finally went down in flames, though, he did it in style. His $122 million production earned roughly 10% of that tally back on opening weekend on the way to paltry final receipts of just under $38 million. Comparison films given to describe this behavior involved words such as Ishtar and Cutthroat Island. Perhaps it's fitting that the director of Pearl Harbor would be assailed in such shockingly emphatic fashion. The most amazing aspect, however, was how quickly Bay had company in the Land of Monumental Failures.

Rob Cohen was the director of xXx and The Fast and the Furious, each of which opened north of $40 million. His next project was a film starring Academy Award winner Jamie Foxx, arguably the hottest name in Hollywood. The problem was that the production in question, Stealth, had been cast before Foxx's star had rapidly ascended. As such, he was only a small part of the movie. The actual stars were semi-unknowns Josh Lucas and Jessica Biel. The marketing department faced an uphill battle from the get-go, but few expected the title to fail so completely. Like The Island, this $130 million production earned barely 10% of its budget opening weekend. At $31.7 million, its final receipts were somehow several million lower than the bombing Bay production. So Stealth goes down as the slightly bigger loser financially in theatrical release. This is the box office equivalent of being the winning date in a game of Dogfight.

What have we learned thus far? Summer 2005 box office saw 24 out of 27 weekends of box office decline from the previous year while containing two of the largest financial disasters ever. What was the cause of this box office behavior? Apologists would have you believe any number of suggestions. Some argued that box office had been too good for several years and a correction was due. A few pointed to the unexpected success of The Passion of the Christ in 2004, arguing that its presence artificially inflated pre-summer receipts. Those were deemed to be irrelevant. They just shouldn't count for some nebulous reason that never was fleshed out. BOP analysts always got a particular kick out of that one.

The most frequent target in the Blame Game, however, was movie quality. Pundits pointed out that there just wasn't the usual assortment of quality offerings at theaters in 2005, especially compared to 2004. While this last one wins the closest to the pin competition, it's still innately flawed. Are we really to believe that audiences felt that 2005 films were inferior to 2004 titles 24 out of 27 times? Of course not. Instead, it's a much more obvious explanation. Consumer behavior has changed.

Emerging technologies allow viewers to watch television programming at their convenience through the magic of TiVo. The aforementioned Netflix marketing concept is a masterstroke of business which almost single-handedly destroyed Blockbuster's perceived monopoly. Similarly, PPV sales are at an all-time high. This is to be expected in combination with the usage of TiVos and other PVRs. A person may order a movie, then watch it at his/her convenience. The very dynamic of supply and demand has been fundamentally altered in this manner.

And then there is that tiny little object which drives Netflix, the DVD. Historically, consumers went to films because they were not inclined to wait for a production's release on home video. Since the advent of DVD, however, the time frame between a title's theatrical release and its availability at the local Wal-Mart has changed from an extended period of time to an average of three months. We have even witnessed a few late September/early October titles make their way onto DVD in time for Christmas. In short, there is no longer the same incentive for consumers to see a movie before it exits theaters. If they miss it, there is an easy fallback method for consumption in place.

Finally, the gap between a title's exodus from cinemas to its availability for purchase is nonexistent. Studios don't mind this, since they get a much larger share of the profits from DVD sales than from the shared contracts they have with exhibitors. Consumers love that they may quickly and economically add favorite titles to their person catalogues. In point of fact, the only people getting screwed in all of this are theater chains. That dynamic will only grow more notable in coming years, as studios further tinker with the day and date of release. Sadly, this means that the changing box office behavior we saw in 2005, as exemplified by Stealth and The Island, is not a fluke. Box office malaise is a trend.

A company that makes video display products for military and industrial uses is setting its sights on a new market -- the iPod.

Bellevue-based eMagin Corp. has developed a wearable headset system that plugs into Apple Computer's portable media device and displays video from it in front of one eye, using optical technology designed to give the picture a higher resolution and make it appear larger than on the iPod's screen.

The system, dubbed the EyeBud 800, is another entry in the booming ecosystem of accessories and complementary products that has emerged around Apple's portable music player. But this isn't in the realm of a $20 carrying case. Scheduled to debut in the first half of this year, the EyeBud is expected to retail for as much as $599 -- $200 more than the cost of a 60-gigabyte iPod.

But eMagin's executives are betting that the notion of a virtual big screen will win people over. With the proximity of the screen to the eye, and the magnifying effect of the company's optical technology, the company says that using the headset is akin to watching a 105-inch display from 12 feet away.

The EyeBud system uses a separate control module, about the size of the iPod, which includes a rechargeable battery pack. The headgear might garner curious looks when worn in public. But eMagin executives say they expect people to get used to the appearance, in the same way that Bluetooth headsets are no longer uncommon.

EMagin will be among the sea of companies unveiling products and seeking to drum up interest at this week's Consumer Electronics Show in Las Vegas.

The EyeBud uses the same underlying technology as eMagin's more advanced Z800 3DVisor, an existing system that retails for $899. That system puts a display in front of each eye and uses head-tracking technology to let people look around virtual worlds, such as video games.

Both devices can also be used as an alternative way of viewing regular computer screens.

The 10-year-old publicly traded company, which licenses a portion of its technology from Eastman Kodak, has posted cumulative sales since its inception of $10.3 million, as of September, according to regulatory filings. Considered a development stage company until January 2003, eMagin posted a net loss of $11.7 million in the nine months ended Sept. 30, according to filings.

Although eMagin has recently started offering its own consumer products, the bigger portion of its business remains selling micro displays and optical systems as components to manufacturers of commercial, industrial and military devices.